How Credit Cards Can Affect Your Credit Score

Having credit cards can be very dangerous for some people.  They think it’s free money but what they forget is that they have to pay it back.  To have good credit you need to borrow money.  One of the easiest ways to borrow money is to have credit cards.  Your credit score is a number based on objective, impartial formulas, compared to millions of other people that translate the contents of your credit report into a 3-digit number.  If you want to buy a house or a car or even get more credit, you need what is considered a “good” credit score.

Unfortunately for some people, having the credit cards can also get you a “bad” credit score.  Especially in today’s economy, many people are finding it harder and harder to pay off their monthly statements.  Many people are finding that their once “good” credit score has turned to a “bad” credit score with just a few missed payments.  Each time you are late on a payment, a credit company can file a delinquency with one or all of the 3 credit reporting bureaus.  Once it is filed, your credit score will drop.  Each time one is filed, your credit score will be dropped even more.

Some people believe it is better to have a lot of credit cards to their name.  Unfortunately having too many credit cards or lines of credit under your name can also bring your credit score down.  If you’ve ever applied for a loan for a car or house and had your credit report pulled, you’ll find there might be a negative against your credit score because you have too many accounts open.  Ever card that you opened will be listed in your credit report even if you have no balance against it.  It’s there because lenders want to know if there is any possibility you will be taking more money that will affect if they get paid back.

Credit cards have become a necessity of today’s world.  You need credit cards to build your credit history and obtain a good credit score.  The better credit score you have the more offers you will receive to get more credit cards.  The more money you borrow, the more you might not be able to pay it off there by lowering your credit score.  It’s a balancing act that many adults have to learn how to do.  As much as it is necessary to have them, you have to be careful that you don’t borrow more money than you can afford.  Check out our website for more information